Cape Town is coming after Airbnbs

The City of Cape Town plans to tighten enforcement on commercial-scale short-term letting to ensure properties primarily used for Airbnb-style accommodation pay commercial, not residential, rates.

On 9 February 2026, the City of Cape Town announced that a draft Short-Term Letting By-Law, aimed at improving compliance with the existing Rates Policy, will go out for public participation in due course.

“The proposed by-law will make it harder to game the system by only paying residential rates while operating a commercial short-term letting enterprise,” the city said.

“Under the city’s existing Rates Policy, all premises primarily used for commercial accommodation businesses – including short-term letting – are required to pay commercial property rates.”

The city clarified, however, that this does not apply to properties that are used as a primary residence with some short-term letting, for which residential rates continue to apply.

Long-term rentals are also not considered a commercial enterprise as the property is used as a primary residence by the tenant.

The city explained that, over time, it has been systematically identifying non-compliant properties where residential rates are being incorrectly paid.

“The proposed by-law will aim to take these efforts a step further to improve Rates Policy compliance and ensure fairness in the accommodation sector,” the city said.

To determine compliance, the city said it was sourcing occupancy and availability data directly from short-term letting platforms to determine the primary use of a residence.

It is also engaging with those whose occupancy data shows they should be paying commercial rather than residential rates.

Further details, including the full draft by-law and public participation schedule, will be made available after all due Council processes have been followed.

In the interim, the city encouraged short-term letters to ensure they are compliant now, rather than waiting until new measures are introduced.

They can now approach the city to ensure the correct commercial rate category is applied to residences primarily used for short-term letting.

Levelling the playing field

“The city continues to support the tourist economy in the strongest terms and regards short-term letting as an important sector for servicing diverse tourist needs,” the city said.

“However, the city believes that the playing fields for businesses should be equal, with all those running short-term letting enterprises paying the correct rates category required of a commercial business.”

Importantly, the City of Cape Town clarified that the proposed draft By-law does not introduce a new tax or a tax hike.

Rather, it is a measure to improve compliance with the city’s existing Rates Policy, which already requires short-term letters to pay commercial rates for properties primarily used for this purpose.

Airbnbs have long been a controversial issue in Cape Town, with locals attributing the decline in affordable housing to the rising popularity of short-term rentals.

“It must be noted that Cape Town’s housing stress is not foreign-made, investor-made, or Airbnb-made. It is supply-made,” the city previously told Daily Investor.

“When a city grows, its housing stock must grow with it, in volume, in typology, in density, and in spatial spread.”

The city added that Cape Town is leading the way nationally through several initiatives to increase housing availability. These include –

• Land release for affordable housing: In the past two years, Cape Town has released more land for affordable housing than in the previous 10 years, with a pipeline of 12,000 well-located affordable housing units close to the CBD and other key parts of the metro.
• Land discount guidelines: The city has published guidelines allowing City-owned land to be heavily discounted, maximising the number of social housing units developed – a national first.
• Utility discounts for social housing: Cape Town is offering significant discounts on water, electricity, and property rates for social housing properties, another first.
• Municipal planning By-law amendments: The city is working to streamline development approvals and reduce red tape, especially by micro-developers building small-scale units.
• Support for micro-developers: Cape Town is providing micro-developers with pre-approved building plans and development charge discounts to encourage the safe and compliant construction of small-scale rental units in townships and areas of highest demand.

The city noted that interventions are needed to make building new houses less bureaucratic and time-consuming, a shift “which has been a strategic focus of our Mayoral Committee”.